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The Lean Strategic Challenge


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by Daniel T Jones of Lean Enterprise Academy show at the Manufacturing Institute event on 1st June 2004

Published in: Education, Business, Technology
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The Lean Strategic Challenge

  1. 1. The Lean Strategic Challenge Professor Daniel T Jones Lean Enterprise Academy
  2. 2. Who am I? Co-author with Jim Womack of The Machine that Changed the World and Lean Thinking Founder of the non-profit Lean Enterprise Academy in the UK, and Board member of the Lean Enterprise Institute in the USA Thought leaders in spreading lean thinking across every industry, as well as services, healthcare etc. Researchers and publishers of the core knowledge needed to build a lean business system Mentor to firms experimenting at the lean frontier
  3. 3. Progress so far in the US and UK Toyota is having a significant demonstration effect in both countries – and growing market share There is now a widespread awareness of lean and a growing pool of people with hands on lean experience There is no longer a debate that lean is the way to go – most large firms have a lean initiative going Growing network of manufacturing centres in the UK and some universities are beginning to move But progress is still patchy – which are hidden by a healthy economy
  4. 4. Taking Stock in Autos Toyota is making another big push – In Europe they will challenge the premium prices of the Germans and hybrid will challenge Europe’s strength in diesels Toyota is building a low cost supply base in Mexico and is challenging European & American suppliers to work with them – China is another story In the UK we look good in assembly – until you look behind this at schedule stability and the hollowed out supply base The challenge is to assure the log term viability of our key players
  5. 5. Taking Stock in Aerospace Lots of effort and some progress with lean in aerospace manufacturing – but a lot more is possible Impressive examples of lean in repair and overhaul of both engines and airframes – by manufacturers and the military Some progress on delivering complete use packages and power by the hour A rapidly changing customer base wanting quite different products – and new competitors
  6. 6. Taking Stock in the Process Industry In the UK in Steel we missed the boat on lean – while others such as Alcoa showed the way Chemicals has paid little attention to lean so far – though they are under pressure to deliver little and often – the challenge is to also make little and often Pharmaceuticals and food processing are now being driven by retailers (Tesco and Asda) reshaping distribution and demanding synchronised production – based on Lean and TPM – and not ERP systems!
  7. 7. Which means We need to redouble our efforts to radically rethink what future customers really want We need to make much more progress with lean product development and lean manufacturing And to spread it right across the organisation to every support function and every office And to reshape our supply base to compress each value stream It all comes down to a relentless focus on process
  8. 8. Toyota’s Lean Strategy “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.” Which is why Toyota will be No 1 by 2010
  9. 9. Lean Thinking The objective is to manage the business backwards from the customer definition of value - not forwards from your organisation and your assets To create lean primary processes to design, deliver and support this value - with minimum wasted effort and time – and the necessary lean support processes And to build a lean management system to develop, sustain and improve these processes over time Be clear about customer Purpose, before designing the Processes and then organising the People
  10. 10. Understanding Lean Initially thought of as empowered teams and continuous improvement – Kaizen and TQ Then as a box of tools – 5S, SMED, TPM etc.- sometimes combined into a Production System Then as a more radical reconfiguration of individual operations – Kaikaku – all still Point Kaizen Value stream mapping introduced the visual language for Flow Kaizen and System Kaizen But bottom up Lean can only go so far – at some point it needs to be linked to a clear business case and led by top management – a Lean Business System
  11. 11. Where Can You Lean? Begin by filtering your portfolio of products or tasks Start to create flow on the things you do regularly:- On high-volume parts with regular demand Or on low volume parts made on simple tools Or on the design and quotation of one-off products Or on frequently performed tasks in the office Then work to incorporate less frequent products or tasks – modularising them, quicker changeovers, etc – while challenging the need for the long tail The end objective is to be able to produce to customer demand – Every Product Every Interval
  12. 12. The Logic of Lean To only one pacemaker process With just the right Standard Inventory of:- Cycle stock Buffer stock and Safety stock Uninterrupted flow back to the customer’s point of use No warehouses, only Cross-Docks and Mixed-model Milk Runs FIFO Reflexive Pull all the way back to raw materials Every Product Every Interval capability Separate capacity planning from production instructions Much faster response and throughput times, higher quality on time, at much lower cost Production pulled from every upstream step Every step is:- Valuable Capable Available Flexible and Adequate Combine steps where you can to flow Demand signals direct from the customer’s point of use No created demand amplification Levelled and released in small quantities
  13. 13. Current State Value Stream ShippingAssembly 2Assembly 1S. Weld 2S. Weld 1Stamping Production Control MRP Weekly Schedule Daily Ship Schedule Production Lead Time = 23.5 days Value Added Time = 184 secs State Street Assembly Forecast Daily Order Daily Michigan Steel Forecast Weekly Order 2 x Week II I I I I Future State Value Stream Production Lead Time = 4.5 days Value Added Time = 166 secs Shipping Production Control State Street Assembly Forecast Daily Order Daily Daily Order Weld and Assembly CellStamping Michigan Steel Forecast Daily Order Daily Ask the key questions Implementation Plan Product Value Person Family Stream Measurable Monthly Schedule in Business Objective Goal Charge Objective 1 2 3 4 5 6 7 8 9 Improve Profitability In Steering Brackets V S Manager Jim Date 03/02/2003 Product Family Steering Brackets Pacemaker *Continuous flow from weld to assembly Zero WIP John *Kaizen to 168 secs < 168 s/t Dave *Eliminate weld changeover < 30 sec c/o Sam *Uptime weld #2 100% Mike *Finished goods pull 2 days FG Sue *Materials handler Pull Schedule James routes Stamping *Stamping Pull 1 day inventory Fred + pull schedule *Stamping changeover batch size Tim 300/160 pieces c/o < 10 min Supplier *Pull coils with daily delivery Graham daily deliveryr < 1.5 days of coils at press Check progress and stabilise Implementing Lean
  14. 14. Using a Common Language Lean Enterprise Academy Acme Stamping Steering Bracket Value Stream Improvement Background Acme supplies stamped steel steering brackets (LH & RH) to State Street Assembly. The product goes through 5 manufacturing processes & shipping. The customer uses 18,400 pcs/month & requires daily shipments in pallets of 10 trays of 20 brackets. A pallet is either all RH or LH. Current Situation Lead time for steering bracket from coil steel to shipment = 23.6 days Of 23.6 days, only 188 seconds are spent making a bracket. Large inventories of material between each process. Long changeover times, downtime in welding. State Street Assembly Michigan Steel Co. 1x daily I Production Control Daily Ord er Weekly Fax 6 Week Forecas t 90/60/3 0 Day Forecas t Weekly Schedule Ship Sche dule Analysis Each process operates as isolated islands, disconnected from the customer. Push system, material builds up between each process. Each process builds according to its own operating constraints (changeover, downtime etc.) Plans based on 90 & 30 day forecasts from customer. Weekly schedule for each department. System is frequently overridden to make delivery Goals Improve profitability of steering bracket value stream. Reduce lead time - 23.6 days to 4.5 days. Reduce inventories: Stamping 7.6 days to 1 day. Welding 6.5 days to 0 days. Shipping 4.5 days to 2 days. Recommendations Create continuous flow through weld & assembly Establish TAKT time . Base the pace of work through weld & assembly on customer demand. Set new weld - assembly cell as pacemaker for entire value stream. Establish EPE_ build schedule for stamping based on actual use of pacemaker cell & pull steel coils from supplier based on actual usage by stamping. Improve uptime in weld. Establish material handling routes for frequent withdrawal & delivery. Establish new production instruction system with Levelling Box. Follow Up Reviews & involvement of related departments TBD. Other functions: Production Control Material Handling, Purchasing, Maintenance, Human Resources, Finance. Production Control Daily Ord er Daily Order 6 Week Foreca st 90/60/3 0 Day Forecas t State Street Assembly Michigan Steel Co. Daily Order 20 OXO X Current State Map Future State Map Deliverables Responsible Review CCF at pacemaker Kaizen each CT to >TT Weld uptime to 100% CO reduction to < TT Pull at pacemaker FG = 2 days KB Matl handling Levelling Box Pull from Stamping WIP = 1 day CO < 10 min Pull from supplier Info flow Daily delivery RM = 1.5 days Action Plan For Problem solving and managing projects
  15. 15. Current State 44d 55m 73 8 Steps Time Steel DELTA STEEL Stamping GAMMA STAMPING Warehouse Cross Dock Wipers BETA WIPERS Assembly Dist. Centre Cross Dock ALPHA MOTORS Amplification F E D C B A % 40 30 20 10 0 F E D C B A Quality & Delivery ppm 2000 1500 1000 500 0 F E C A % 10 5 0 AssemblyWipersStamping Steel Dist. Centre 16d 55m 39 8 Steps Time Amplification F E D C B A % 40 30 20 10 0 Quality & Delivery ppm 2000 1500 1000 500 0 F E C A % 10 5 0 F E D C B A DELTA STEEL GAMMA STAMPING BETA WIPERS ALPHA MOTORS Future State 2 Flow and Pull between Plants Time reduced from 44 to 24 days Ideal State Value Stream Compression Dist. Centre 3d 55m 30 8 Steps Time Amplification F E D C B A % 40 30 20 10 0 Quality & Delivery ppm 2000 1500 1000 500 0 F E C A % 10 5 0 F E D C B A Steel EPSILON STEEL Assembly ALPHA MOTORSSUPPLIER PARK Wiper Cell Stamping Cell Time reduced from 24 to 3 days Across the Value Stream
  16. 16. The Process Organisation Every process has a customerEvery process has a customer –– and can be leaned!and can be leaned! R&D R&D Supply Supply Logistics Logistics M arketing M arketing Engineering Engineering Finance Finance Planning Planning HR HR EnablingEnabling supportsupport processesprocesses UseUse Customer consumption process Primary value creating processes SupportSupportBuild/ServeBuild/ServeDesignDesignSupplySupply
  17. 17. The Next Generation How would you design the next generation product and the process, tooling, supply base and distribution with enhanced functionality and for 30% lower costs? Designing out unnecessary steps Designing right-sized tooling Value stream compression with suppliers Minimum costs in use through the life of the product
  18. 18. Lean Business System Has to be built on the Value Stream Plans for each product family – led by the Product Line Managers or Value Stream Managers – who have lots of responsibility but little formal authority But these plans can only be realised using the resources of the supporting functions – once the needs of all the value stream plans are known It is top management’s job to lead a policy deployment process to prioritise and agree the resources for these actions and to align them with the overall needs of the business
  19. 19. Your Check List Is top management willing to lead lean? Is there a common way to manage lean projects – and to sustain the results? Is someone responsible for reconfiguring each product value stream through your facility and beyond? Is there an active policy deployment process based on value stream plans to prioritise and resource them? Is there a common language across the whole organisation for seeing processes and for root cause problem solving?
  20. 20. The Lean Strategic Challenge Professor Daniel T Jones Lean Enterprise Academy